Q&A with Jeff Baird: What Are ACOs and What Do They Mean for You?

If you think accountable care organizations, or ACOs, will
only affect hospitals and physicians, says health care attorney
Jeff Baird, think again. These new entities will be charged with
treating patients across care settings to better coordinate and
improve care for Medicare patients that will keep them out of the
system. That presents HME providers with both opportunities as
these new referral sources emerge—and the challenges of
providing the services the ACOs want. Here’s Baird’s
explanation of ACO basics.

Question: Where do ACOs come from?

Answer: The Patient Protection and Affordable Care
Act (Section 3022) created the Medicare Shared Savings Program,
which allows CMS to contract with ACOs beginning Jan. 1,
2012.

Question: What is an ACO?

Answer: An ACO is a group of health care providers
that agree to be accountable for the quality, cost and overall care
of beneficiaries who are assigned to the ACO.

Question: What requirements must be met in order for an ACO
to be set up?

Answer: An ACO must: have a formal legal structure
(e.g., corporation or LLC); have a sufficient number of primary
care professionals for the number of assigned beneficiaries (there
will be at least 5,000 beneficiaries assigned to each ACO); enter
into an agreement to participate in the program for at least three
years; and meet certain quality standards. There are additional
requirements as well.

Question: Who can form an ACO?

Answer: At this point, the only providers that can
form ACOs are hospitals, physicians and similar professionals, such
as nurse practitioners and physician assistants. The Department of
Health and Human Services has the authority to add to this
list.

Question: How can an ACO make money?

Answer: The ACO will bill and receive the
traditional fee-for-service amount from Medicare. However, to
encourage savings, CMS will set a benchmark amount for the ACO, and
the ACO will be entitled to share in any savings if the actual
expenditures of the ACO come in under the benchmark.

Question: What steps can an HME provider take to be
involved?

Answer: An HME provider should introduce itself to
ACOs that are in the formative stages. The ACO will be a large
referral source, and the HME provider will continue to be paid on
the traditional fee-for-service basis. It is also likely that the
physicians in an ACO will refer patients to other providers, such
as to an HME provider. Although such referrals may cut down on the
amount that the physicians in the ACO bill Medicare, this reduction
will be offset by the increase in the amount of shared savings that
the organization will be eligible to distribute to its
members.

For example, as a value-added service to the ACO, an HME company
could provide a patient compliance program that should save the ACO
money because patients would need fewer physician services. This,
in turn, should increase the amount of shared savings that the ACO
would be eligible to distribute.

Question: So when will CMS publish regulations on
ACOs?

Answer: On March 31, CMS published over 120 pages
of proposed regulations on ACOs. The text of the proposed rule can
be found at www.cms.gov/sharedsavingsprogram/.
Comments will be accepted until June 6, 2011.

For additional information, see a fact sheet on ACOs at
http://www.HealthCare.gov/news/factsheets/accountablecare03312011a.html.

Jeffrey S. Baird, Esq., is chairman of the Health Care Group at
Brown & Fortunato, P.C., a law firm based in Amarillo, Texas.
He represents pharmacies, infusion companies, home medical
equipment companies and other health care providers throughout the
United States. Baird is Board Certified in Health Law by the Texas
Board of Legal Specialization. He can be reached at 806/345-6320 or
[email protected].